POST-WAR TRADE

Greymouth Evening Star, 8 April 1943, Page 5

POST-WAR TRADE

BRITISH GOVT.’S PROPOSALS

MEANS OF EXCHANGE

RUGBY, April 7. A Government White Paper outlining the proposals for an International Clearing Union recalls the Chancellor of the Exchequer’s speech in the Commons on February 2, when he spoke of the post-war need for international monetary mechanism which would serve the requirements of international trade. Described by the Government as a preliminary contribution to the solution of one of' the problems of international economic co-operation after the war,the plan in the White Paper has been prepared by the Treasury, after consultation with other departments, and after informal discussions with officials of the Governments of the Dominions, India, and others. It has been communicated to representatives of the other United Nations

The chief purposes of the plan are to provide a generally acceptable means of payment between the nations; ensure that any alterations in exenange values and national currencies are made as a result of orderly international procedure, and not by unilateral action; relief from excessive strain to any nation suffering from a temporary difficulty in meeting obligations to make payments abroad, while at the same time subjecting it to gradual pressure towards restoring the position of the balance. All these purposes are subsidiary to the main purpose —the promotion of steady expansion and flow of international trade. The White Paper proposal is to establish an International Clearing Union, based on international bankmoney, called, it is suggested, Bancor, fixed, but not unalterably, in terms of gold and accepted as the equivalent of gold by all members of the Union for the purpose of settling international balances. The central banks of all member States —also non-members —would keep accounts with the Union, through which they would settle exchange balances at par value, as defined in terms of Bancor. Countries having favourable balance payments with the rest of the world would have a credit account with the Union. Those having an unfavourable balance would have a debit account.

The White Paper continues: The idea underlying such union is simple —to generalise the essential principle of banking as it is exhibited within any closed system. The principle is necessary equality of credits and debits. If credits can only be transferred within it, the Union can never be in any difficulty in honouring the cheques drawn uoon it. Its sole task is to see the members keep the rules, and that the advances made to each are prudent and advisable for the Union as a whole. Some minor provisions of the plan •are that all the Allied nations will be invited to become original members. The governing boards shall be appointed by the Governments of member States. Those with smaller quotas will be in convenient political or geographical groups. Member States will agree between themselves as to the initial values of their own currencies In terms of Bancor. The value of Bancor, in terms of gold, shall have quotas based perhaps on imports and exports, which shall determine the responsibility in management of the Union and the right to enjoy the Union’s credit facilities. Member States shall agree to accept payment of currency balances due from other members by transfer of Bancor in the Union’s books. The governing board shall be entitled to ask and receive from each member the relevant statistical and other information. Non-member States keeping clearing accounts with the Union would have no right to overdrafts, and no say in the management. The White Paper points out that the Clearing Union might become the nivot of the future economic government of the world.

CURRENCY STABILISATION

BRITISH—U.S.A. SCHEMES

WASHINGTON, April 7. Outlining the United States Treasury’s post-war currency stabilisation proposals, the Secretary of tne Treasury (Mr Hem|y Morgenthau) declared that the machinery would be established when two-thirds of the United Nations and their associates had agreed upon procedure, and he expressed confidence that, gven time, agreement would be reached. The 4000-word plan reveals that the United States would exercise a power of veto—a provision likely to arouse serious opposition in Britain, where the House-of Commons is due to consider a counter-plan drawn up by Mr J. M. Keynes. Decisions of the international board would be by simple majority, except that important operations would require an 80 per cent. vote. The United States proposes to contribute 2,000,000,000 dollars, and would presumably be entitled to 25 per cent, of the votingpower. Thus the United States could prevent other members mustering the needed 80 per cent, of votes on vital issues. Mr Morgenthau explained that the fund would not constitute an international bank. It would not lend money. However, it would eliminate the need for individual exchange control funds, which could be used to finance the new fund. The primary object of the proposals, which were highly tentative, was to assure rapid transition from war-time restrictions on trade, and especially to allow warridden nations to obtain foreign exchange with which to re-start trade immediately after the war. The proposed new 10- dollar international monetary unit, . called “Unitas,” would not be issued in the form of notes or coins. Members would deposit gold for credit in “Unitas,” which would be redeemable by gold and transferrable between members. Mr Morgenthau added that the United States wanted agreement to emerge from , the impending conference, but did not wish to act the part of big or rich brother. Ten out of the 37 nations invited to the conference so far had responded enthusiastically. The Washington correspondent of the “New York Times” says that the most conspicuous difference between the White plan and the Keynes plan is the apportionment of control. Under the White plan it is on the basis of capital participation, whereas under the Keynes plan the basis is pre-war trade, which would give Britain a greater voice in control, since in 1938 British trade was about 9,000,000,000 dollars, compared with the United States 6,000,000,000 dollars.